Asked by Nachelle Culpepper on Jul 25, 2024
Verified
Define each of the symbols and explain the meaning of M x V = P x Y.
M x V = P x Y
The equation representing the quantity theory of money, where M is the money supply, V is the velocity of money, P is the price level, and Y is the real output.
- Understand the fundamental premises of the quantity theory of money.
Verified Answer
DC
Daniel CastroJul 30, 2024
Final Answer :
M is the quantity of money, V is the velocity of money, P is the price level, and Y is the quantity of output. P x Y is nominal GDP. The amount people spend should equal the amount of money in the economy times the average number of times each unit of currency is spent.
Learning Objectives
- Understand the fundamental premises of the quantity theory of money.